Write an essay addressing the following question: How has globalization (as defined above) affected the responsibilities of corporations? In your essay, be sure to includes examples of proper and improper conduct of globally active companies.
Effects of Globalization on Responsibilities of Corporations
Over the last few decades, globalization has been a leading concept in the business life. The emergence of globalization has been necessitated by technology, need to diversify operations, social-cultural impacts, product specialization and exploration of new business opportunities. Research by Mahmood & Khilji (2013) established that globalization has done more good than harm including increased profits for the company, reputation, increased customer base and social and environmental impacts among others. On the flipside, globalization brings changes in company economic strength, society and environment change. In this case, globalization incorporates movement of goods and services, labor, information, capital among other factors of productions across the globe. In this essay, the global dimension of corporate citizenship will be discussed in relation to how globalization affected responsibilities of the corporations.
Irrefutably, a company is expected to operate ethically. It is the responsibility of a corporation to incorporate ethics and moral behaviour in the course of operations (Levi, 2012). In this regard, a company that resolves to take its operations on the global scale must adhere to corporate citizenship otherwise decline in profits. Due to movement of goods and services, as well labour movement from one country to another, company experiences lucrative competition from the industry players. In this case, company strives to reduce cost of production while maximizing profits. As such, global corporations strive to use all the means in order to cope with the competition, especially in the foreign country. Managers of such companies operate ethically in quest to remain relevant in the industry. This improves the responsibility of the corporation. Contrary, competition can make managers of the company use unethical behaviours. A good example of the corporation that compromised its social responsibilities due to competition in the foreign market is Starbucks Corporation. According to a report by greenbiz.com in 2009, due to globalization, Starbucks was criticised by environmentalists and activists from its low purchase of coffee from farmers. This created the economic hardship to the farmers. The company takes advantage of supply surplus. This affects its reputation in the global arena.
In essence, unemployment rate is increasingly becoming an issue in the world economy. Today, due to globalization, an individual can move from one country to another in such of employment. According to Scherer & Palazzo (2009), cross-border movement of labour affects corporation’s responsibilities. For example, issue of unequal distribution of income and wealth may arise. Where several individuals are in need of employment, corporations take advantage of paying less wage and salaries. This is based on the desperation perception of the citizens. Starbucks Company has been spotted to compromise its social responsibilities due to a high number of labor in its foreign market. This is according to research by panmore.com, which established that Starbucks pays less in its New Zealand market. The article depicted that the minimum wage for youth payment in New Zealand is low compared to minimum wage in the United States. Another research article by qz.com established that unemployment in Korea hit up to 12.9% in February 2016. This means that chance of getting a high-paying job is diminished. Youths consider Samsung, LG, SK, and Hyundai as their favourites. However, due to a high number of graduates searching employment across the globe, the article established that these companies compromise their social responsibilities by paying less salary and wages to graduates.
Globalization which results in movement of products and services from one country to another brings about an invasion of human rights and abuse (Ycel, 2010). This is experienced in price discrimination. A corporation that sells products and services to foreign market take advantage of customers’ ignorance to overcharge them with an intention of making supernormal profits. In addition, such companies end up providing outdated products through misleading advertising to take advantage of the new market. In this case, company’s social responsibility is affected. Through globalization, abuse of human rights is also propagated through products which are not up to standards. Pharmaceutical companies readily charge higher prices for customers in foreign markets they perceive to be wealthier. As renowned French pharmaceutical company headquartered in Paris, Sanofi Company has been accused of price discrimination in its foreign market. This affects social responsibility motive.
Globalization through knowledge affect responsibility of corporations. Information is an imperative resource as far as growth and prosperity are concerned. As such, information is a factor of production in the current business environment. Through globalization, information is exchanged from one country, region continent to another. In order to adapt to changing the global business environment, information exchange becomes an imperative affair. For instance, use of technology such as websites and social media has been used to connect entrepreneurs across the globe in a bid to share data and information. In a bid to obtain more information, corporation’s responsibility is affected through the use of fraud methodologies such as hacking and cyber-crimes. Especially where the industry is faced with stiff competition, corporation use dubious methods to gain information. This compromise responsibility of the company. Example of hacking to obtain information was carried out by Fancy Bears group. This exposed medical record of World Anti-Doping Agency. This is according to an article by atlas-comms.com dated February 2017.
In summary, globalization has been used to foster growth. Multinational companies enjoy benefits of an increased customer base, reputation, and exploration of business opportunities. However, globalization affects corporation’s level of responsibilities through propagating unethical acts such as price discrimination, dubious acquisition of information among others. Similarly, globalization through movement of products and services creates competition in the market. In order to cope with competition, corporation rethinks about social responsibilities.